US oil inventories have declined by 11 million barrels per week on average for the past 9 weeks. Just how dramatic is that, really?
As Iran War-driven supply disruptions persist, we are hearing more commentary about perilously low US oil inventories.
To be fair, the prevailing commentary is largely correct. But much of it conflates two things that deserve to be pulled apart.
One is the existing inventory level.
Here we have different stories depending on whether we’re looking at commercial crude inventories or the Strategic Petroleum Reserve (SPR).
The other is the rate at which inventory levels are declining.
Here the stories align directionally, but there’s still a notable difference between the commercial side and the SPR.
If we get these two elements straight, we build a story with more nuance.
By the measure of level, inventories look ordinary. By the measure of rate of decline, we’re closing fast on territory we’ve not seen in years.
You can read the full analysis in my most recent post at Foundations of Energy.
